Pakistan has received a fresh $1.3 billion tranche from the International Monetary Fund under the EFF and RSF programs, providing support to foreign exchange reserves as budget talks for the new fiscal year officially begin.
The amount was received by the State Bank of Pakistan and will be included in the country’s foreign exchange reserves for the week ending May 15.
The $1.3 billion received from the IMF includes funds under two separate programs.
According to details, $1.1 billion has been received under the Extended Fund Facility loan program, while $200 million has been received under the climate financing program.
Last week, the IMF’s Executive Board had approved a fresh $1.1 billion loan tranche for Pakistan after completing the third review of the country’s economic reform program under the Extended Fund Facility.
The Fund also approved around $220 million in climate funding under the Resilience and Sustainability Facility, bringing total disbursements under the two arrangements to about $4.8 billion. It said Pakistan’s economy is stabilizing despite a difficult global environment and the ongoing Middle East war.
IMF mission arrives for budget consultations
Alongside the disbursement, an IMF delegation has arrived in Pakistan for consultations on the new federal budget.
Negotiations between Finance Ministry officials and the IMF mission have begun in Islamabad, formally launching preparations for the budget-making process.
The IMF delegation will stay in Pakistan until May 20.
Budget targets, reforms
During the talks, Pakistan and the IMF will hold detailed discussions on new budget targets, tax revenue and fiscal reforms. Energy-sector reforms and progress on privatization will also be reviewed as part of the week-long consultations.
According to sources, Pakistan has proposed setting the tax revenue target for the new fiscal year at more than Rs15,000 billion. Tax and other economic targets for the upcoming budget will be set in consultation with the IMF delegation.
Meetings are scheduled with the Ministry of Finance, the Federal Board of Revenue and the State Bank of Pakistan. Consultations will also be held with other institutions and departments, including the Ministry of Energy, on reform-related matters.
Development spending, fiscal discipline
Sources said proposals for development expenditure in the new budget will also be prepared during the talks.
Measures to improve fiscal discipline, government spending and budget coordination will be discussed, with both sides expected to review how public expenditure can be better aligned with budget priorities.
